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High Taxes On Foreign Carriers Result In Government Losses

In an attempt to entice foreign airlines to resume direct flights to the Philippines, the House of Representatives in Manila has voted to exempt foreign airlines from both the carrier’s tax and gross billings tax. European airlines have cited heavy taxation as the impetus behind quitting direct flights to Manila. Most airlines pick up Manila passengers from regional hubs such as Singapore and Bangkok, while many Filipinos flying to Europe go on Middle Eastern airlines. The most recent carrier to discontinue service to Manila has been the Dutch airline KLM.

Rep. Jerry Treñas said “The exit of international carriers from the country, where they are taxed, has been in stark contrast to the growth in services experienced by neighboring Asian countries that do not tax foreign airlines. The country’s links with the global markets in tourism and in trade are poor relative to neighboring countries and will suffer substantial further deterioration if corrective statutes are not put in place.”

Rep. Trenas added that the country’s loss is the gain of its neighbors where foreign airlines have shifted their operations, according to a report in the Manila Standard Today.

The tax exemption proposal was approved by the House on second reading before Congress went on its five-week Lenten break last month. Treñas expects the measure to be passed on third and final reading next month when Congress reconvenes.